Subsidies and the Environment

This chapter looks at the WTO agricultural support disciplines and their impact on subsidies that can lead to water overuse or pollution and harm the environment. As the WTO is about trade, the agricultural subsidies are classified according to the degree to which they distort trade, and not according to their impact on the environment. The chapter shows that there is nevertheless some overlap between trade-distorting and environmentally harmful subsidies. Therefore, while limiting trade-distorting support, some of the most environmentally harmful subsidies find themselves also limited. Within those limits however, WTO members are free to pursue different economic, social, and environmental objectives. Depending on the relative importance of each objective, the immediate policy priorities among the members differ. This chapter also shows that while members enjoy significant policy space to pursue their environmental objectives, such space can also be used in a way that may harm the environment.